UPDATE: Vista Group to raise $40M, freeze dividends in
push for growth

July 4 (BusinessDesk) - Vista Group
International, the cinema software developer and film
distribution company, will freeze dividend payments for at
least two years and raise up to $40 million of new capital
in a drive for international growth.

The Auckland-based
company plans to sell between 37.2 million and 41.4 million
of shares at an indicative price range of $2.10 to $2.70 in
an initial public offer, according to the prospectus lodged
with the Companies Office. Vista is looking to raise up to a
total of $100.3 million,, with existing shareholders
keeping between 45 percent and 49 percent of the company.
The new capital will be used to repay debt and fund the
acquisition of controlling stakes in two investments, Movio
and MACCS, with about $15.4 million set aside for future
acquisitions and developments.

Unlike some other high-tech
companies that are forecasting losses in a push for global
growth, Vista expects to be profitable, though it doesn't
plan to pay any dividends for at least the next two
years.

"Our success and profitability to date has provided
the Vista Group with an exciting opportunity to not only
substantially grow its traditional business in cinema, but
also to begin the transition from a cinema software company
to a much broader film industry software company," chairman
Kirk Senior said in a letter to investors. "The group has a
history of paying dividends, however at this stage we do not
intend to pay a dividend until at least 2016 as we focus our
capital on accelerating our software and data analytics
growth within the film industry."

The freeze on dividend
payments implies Vista will retain between $2.4 million and
$4.05 million in 2015 which would have been set aside for
investors based on a dividend policy of distributing between
30 percent and 50 percent of profit. The company's existing
shareholders have been paid dividends of $10.4 million
between 2009 and 2013 on profit of $18.5 million, and have
taken another $3.5 million distribution for the 2014 year,
which is forecast to deliver profit of $3.4 million.

The
prospectus show Vista's recurring revenues have doubled
since 2009, with turnover in the 2013 financial year
standing at $38.7 million to produce earnings before
interest, tax, depreciation and amortisation of almost $9
million. Forecast revenues in the current financial year
are expected to grow to $49.9 million and again to $61.5
million in the 2015 financial year, to produce forecast
Ebitda of $13.2 million and net profit after tax of $8.1
million.

Based on the lower and upper bounds of the
valuation range, those projections give the company an
enterprise value to Ebitda ratio of between 15.7 and 19.6
times in 2014 and between 11.1 and 13.8 times in 2015.

Of
the new funds raised, Vista intends to spend $9.3 million
exercising an option to acquire a further 25 percent stake
in MACCs, giving it 50 percent of the largest provider of
movie distribution software outside the US. Vista will also
spend $4 million to take the remaining 43 percent stake in
Virtual Concepts, which owns Movio, a marketing data and
campaign management platform for cinemas, and has set aside
a provision of $4.6 million if the company meets earn-out
targets.

Some $2.6 million of new capital will be spent on
Numero, a new venture in the data analytics field, and $3.9
million on offer expenses.

Founded in 1996, Vista employs
250 staff in New Zealand, Australia, the US, China, UK and
the Netherlands. Eligible employees will be gifted $1000
worth of shares, and an allocation of shares at a 20 percent
discount will also be offered to employees. If fully
subscribed the share offer will make up 0.5 percent of the
total share capital.

The final price will be announced on
July 16, with the offer opening the following day and
running to August 1. The company expects to list on the NZX
on August 11. The company is seeking a secondary listing on
the
ASX.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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